Norway's treasure guard: interim boss Trond Grande.
Photo:GWLADYS FOUCHE / REUTERS
The managers of the world's largest sovereign wealth fund expect further turbulence in the financial markets. The Covid-19 pandemic is "in no way under control" and remains the biggest problem for investors, said deputy CEO of the Norwegian sovereign wealth fund, Trond Grande , after presenting the half-year results.
Accordingly, the $ 1.15 trillion fund posted a loss of 188 billion crowns ($ 21 billion) in the first half of 2020. That sounds brutal, but it is the result of a remarkable comeback. Between January and March, when the markets collapsed, the sovereign wealth fund lost a total of $ 153 billion - it was its worst quarter to date. In the period from April to the end of June, Grande's people at Norges Bank, which manages the fund, did the exact opposite: With a surplus of $ 131 billion, the fund had the best quarter in its history.
Now Grande expects further fluctuations. "We have to expect some turbulence this fall," he told Reuters. It is so far unclear whether the corona pandemic will decline or gain strength. More than that, "We have already seen some sort of V-shaped recovery in financial markets. I believe there is a slight mismatch between the real economy and financial markets," he said, noting that government support for economies has only lasted so long could be. The full impact on some sectors such as tourism has yet to be seen.
The fund, founded in 1996, is the largest sovereign wealth fund in the world. He holds stakes in around 9,200 companies worldwide and owns 1.5 percent of all listed shares. He also invests in bonds and real estate. He manages about $ 214,000 for every man, woman and child in Norway.
Due to this size and the good performance in the past, investors around the world often take a close look at how the state fund managers in Norway are doing. The total portfolio showed a negative return of 3.4 percent in the first half of the year, with declines of 6.8 percent for stocks and 1.6 percent for unlisted properties, while the value of fixed-income investments fell 5.1 percent as a result of the fall in interest rates rose. The total return was 0.11 percent lower than the return of the fund's benchmark index.
The worst performers were oil companies, whose stocks fell 33.1 percent on the decline in crude oil prices, while technology companies posted the strongest performance, up 14.2 percent. At the corporate level, tech firms Amazon, Microsoft, and Apple contributed the most to performance, while oil company Shell and banks HSBC and JP Morgan Chase performed the worst.
lhy / Reuters